Virginia Energy Regulatory Updates (October 2023)

Below is our firm’s summary of notable energy regulatory activity at the Virginia State Corporation Commission (“SCC” or “Commission”) during October, 2023. Please contact attorneys Will Reisinger or Matt Gooch should you have any questions about these cases or Virginia’s energy market. ReisingerGooch PLC provides regulatory and transactional counsel to clean energy businesses, associations, and public interest organizations. The following is presented for informational purposes only and does not constitute legal advice.

Rate cases, oversight, and resource planning:

  • SCC Staff files testimony and analysis regarding Dominion’s 2023 biennial review application; recommends revenue reduction in 2024 – Case No. PUR-2023-00101

On July 3, Dominion Energy Virginia (“Dominion”) filed an application for a biennial review of its rates and terms and conditions of service. The application is filed pursuant to Va. Code § 56-585.1, which was amended by the General Assembly in 2023. The amendments to the statute changed the schedule for rate reviews from a triennial to a biennial basis. The legislation also required Dominion to move at least $350 million of costs that are currently recovered through riders to its base rates. Dominion states that it complied with this requirement by moving “approximately $352 million in annual revenue requirement from Rider R (Bear Garden), Rider S (Virginia City), and Rider W (Warren County) into base rates.” Dominion also states that the elimination of these riders resulted in a reduction of approximately $6.75 to the typical residential customer’s bill as of July 1, 2023 (based on 1,000 kWh usage per month).

As part of the rate case, the SCC will review Dominion’s earnings during 2021 and 2022 to determine whether Dominion earned above or below its authorized rate of return. The SCC will also evaluate whether going forward rate changes are necessary. The legislation dictated that Dominion’s rate of return on common equity (“ROE”) shall be set a 9.7% as part the 2023 biennial review. Dominion’s current authorized ROE is 9.35%.

The SCC Staff filed the direct testimony of eleven witnesses on October 23. In her testimony, the Staff’s main accounting witness determined that Dominion earned an ROE of only 9.06% during the biennial review period. The Staff determined that this earnings test result was due to several non-recurring expenses during the review period. Based on projected future costs, the Staff recommends a $72.4 million revenue decrease for the 2024 rate year. The SCC will hold an evidentiary hearing on November 28. Pursuant to the statute, the SCC must issue an order approving or rejecting the petition within 8 months of the application, or by March 3.

  • Parties file post-hearing briefs objecting to Dominion’s 2023 Integrated Resource Plan – Case No. PUR-2023-00066.

On May 1, Dominion Energy Virginia (“Dominion”) filed its 2023 Integrated Resource Plan (“IRP”). The IRP is the utility’s plan to meet customer demand over the next 15 years. Dominion’s plan presents five alternative scenarios. All of Dominion’s alternative plans incorporate new combustion turbine gas plants, and four of the five alternatives incorporate small modular nuclear facilities. All of Dominion’s alternatives assume that Virginia exits the Regional Greenhouse Gas Initiative in 2023.

On August 8, several respondents filed expert witness testimony. Several consumer and environmental organizations including Appalachian Voices, Clean Virginia, the Sierra Club, and Advanced Energy United filed testimony criticizing Dominion’s plan. These parties generally requested the SCC to find Dominion’s 2023 to be “unreasonable” due to various alleged errors. Under Virginia law, an IRP is not binding on the utility and, if approved, does not represent SCC approval of any particular facility or course of action. Pursuant to the statute, the SCC must review the IRP and determine whether it is “reasonable” and “in the public interest.”

The SCC held an evidentiary hearing on Dominion’s plan beginning September 19. The parties filed post-hearing briefs on October 24. Several consumer and environmental organizations, including Appalachian Voices, Clean Virginia, and the Sierra Club, urged the Commission to reject Dominion’s 2023 IRP. In its brief, Dominion defended its plan and asked the Commission to find its IRP to be reasonable for purposes of a long-term planning document. 

Renewable energy, efficiency, and new energy infrastructure:

  • SCC schedules hearing and comment opportunity regarding Dominion application to participate in battery storage pilot program – Case No. PUR-2023-00162

On September 18, 2023, Dominion filed an application for approval of additional battery storage resources pursuant to the 2018 Grid Transformation and Security Act. The 2018 law states that such projects are “in the public interest.” The Commission has already approved three projects pursuant to the pilot program. Dominion states that the additional projects, if approved, “will bring the aggregate capacity of all Pilot Program projects approved by the Commission for the utility to 28.34 MW.” In its application, Dominion requests approval of “three projects for deployment of battery energy storage systems (“BESS”) as part of the Pilot Program: BESS-4: Evaluation of Two Co-Located Nonlithium-Ion Technologies; BESS-5: Outage Mitigation and Grid Support Through a Microgrid Capable BESS; and BESS-6: Long Duration Energy Storage in a Behind-the-Meter Application.”

The SCC published a procedural schedule for reviewing this application on October 23. The SCC will hold an evidentiary hearing on January 24, 2024. Interested parties may intervene in the case on or before December 7. The Commission is also accepting public comments filed on or before January 17.

  • SCC schedules hearing on Dominion 2023 VCEA RPS Development Plan and solar construction proposals – Case No. PUR-2023-00142

On October 3, Dominion Energy Virginia (“Dominion”) filed its latest Virginia Clean Economy Act (“VCEA”) compliance filing. The VCEA requires Dominion and Appalachian Power Company to comply with a mandatory renewable portfolio standard and to meet incremental renewable energy and energy storage investment targets. The utilities must file updates on their progress towards the VCEA goals each year.

Dominion’s October 3 application requests approval of the Company’s current RPS development plan. The application also requests approval of 772 MW of new solar resources. This includes both proposed utility-owned projects and third-party owned facilities. The VCEA declares such projects to be “in the public interest,” but does not mandate SCC approval. Dominion also requests authority to recover all project costs through a rate adjustment clause. The SCC published an order for notice and hearing on October 16. The SCC will hold an evidentiary hearing on the application on January 10, 2024.

  • SCC holds oral argument regarding Dominion request for interim authority to implement interconnection standards for small generators – Case No. PUR-2023-00069

On May 2, the SCC published an order initiating a review of its existing regulations governing the interconnection of small electric generators and storage facilities. The order directs the SCC’s Division of Public Utility Regulation to solicit comments from interested parties and provide recommendations for changes to the regulations. On September 15, 2023, Dominion filed a motion requesting interim authority to require certain technology installations at net energy metering facilities. In a separate proceeding, Case No. PUR-2023-00097, the SCC granted a request from the solar industry to block Dominion from implementing certain technology requirements while the interconnection regulations are under review.

In its September 15 motion, Dominion acknowledges the Commission’s directive in Case No. PUR-2023-00097. The, motion, however, requests interim authority to “(1) continue to require either a fiber optic or cellular-based direct transfer trip (“DTT”) communication system, at the customer’s election, when one of two criteria are met…and (2) require installation of a Distributed Generation Panel (“DG Panel”) under certain conditions…” A group of solar companies filed a response in opposition to Dominion’s motion on September 28. The solar advocates call Dominion’s motion “premature” and without credible support. The Commission held an oral argument on the motion on October 18.